IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-20024

WELLNESS WIRELESS, INCORPORATED,

Plaintiff–Appellant,

v.

INFOPIA AMERICA, L.L.C.

Defendant–Appellee.

Appeal from United States District Court

For the Southern District of Texas

USDC No. 4:12-CV-2856

Before REAVLEY, JONES, and ELROD, Circuit Judges.

PER CURIAM:*

Appellant Wellness Wireless challenges the district court’s dismissal of 

its contract claim for lack of jurisdiction, or, alternatively, dismissal under 

Federal Rule of Civil Procedure 19 for inability to join a necessary and 

indispensable party. Because we conclude that the district court has 

jurisdiction over this case and the third party is not a necessary party under 

Rule 19, we reverse and remand. 

* Pursuant to FIFTH CIR. R. 47.5, the court has determined that this opinion should 

not be published and is not precedent except under the limited circumstances set forth in 

FIFTH CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

March 24, 2015

Lyle W. Cayce

Clerk

 

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No. 14-20024

I.

This case originates from a dispute between two companies that are not 

parties to this case: Diabetes Center of America (“Diabetes America”) and 

HealthPia America (“HealthPia”). In 2006, Diabetes America sued HealthPia 

and its CEO because of a business dispute. In the hope of establishing a 

business relationship with HealthPia, Defendant Infopia agreed to pay 

Diabetes America $800,000 on behalf of HealthPia as part of a settlement 

agreement dismissing the suit (“2008 Settlement”). Pursuant to the 2008 

Settlement, Infopia made a $500,000 lump-sum payment to Diabetes America, 

and agreed to execute a $300,000 promissory note payable in installments to 

Diabetes America. In exchange, Diabetes America agreed to release all claims 

against HealthPia. Infopia defaulted on the promissory note following the first 

payment. This breached the 2008 Settlement and nullified the conditional 

release of claims against HealthPia. In late 2008, a default judgment was 

entered for Diabetes America.

Later that same year, Diabetes America allegedly assigned Wellness 

Wireless all of Diabetes America’s rights under the promissory note. 

Subsequently, in 2010, Infopia and Diabetes America signed a settlement 

agreement for unpaid obligations under the 2008 promissory note (“2010 

Settlement”). Infopia paid $300,000 to be released from all claims of Diabetes 

America. Shortly thereafter, Diabetes America declared bankruptcy. Diabetes 

America did not include a right to recovery against Infopia on its schedules of 

assets, nor has it pursued any claim against Infopia during its Chapter 11 case.

Wellness Wireless then began to attempt to collect money from Infopia 

under the promissory note. First, it filed a state court suit on the promissory 

note, which was dismissed for lack of jurisdiction. Second, Wellness Wireless 

unsuccessfully sought to collect on the default judgment in the original 

underlying case between HealthPia and Diabetes America. 

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On this third try, Wellness Wireless filed the instant suit against Infopia. 

The district court dismissed the case. The court concluded that it lacked 

subject matter jurisdiction because the case belonged in the bankruptcy court 

where Diabetes America was a current debtor. See 28 U.S.C. § 1334.1 

Alternatively, the district court held that Diabetes America, as the alleged 

assignor of the 2008 promissory note, was an indispensable party, requiring 

dismissal of the case pursuant to Fed. R. Civ. P. 19. Wellness Wireless 

appealed. 

II.

The district court’s determination that it lacked jurisdiction is a legal 

determination that we review de novo. In re U.S. Brass Corp., 301 F.3d 296, 

303 (5th Cir. 2002). The district court’s decision to dismiss for failure to join 

an indispensable party pursuant to Rule 19 is properly reviewed under an 

abuse-of-discretion standard. Pulitzer-Polster v. Pulitzer, 784 F.2d 1305, 1308 

(5th Cir. 1986). 

III.

The district court’s brief order dismissing the case stated that “the 

bankruptcy court’s jurisdiction is implicated pursuant to 28 U.S.C. § 1334.” To 

support the court’s conclusion, Infopia argues either that (a) the bankruptcy 

court had “exclusive jurisdiction” over the dispute because Diabetes America 

never validly assigned the 2008 Promissory Note, or (b) if there is any doubt 

about the proper payee, then § 1334 divests a district court of jurisdiction 

because the case will have a “conceivable effect” on a bankruptcy estate or 

involves an asset of the bankrupt estate. These arguments are plainly wrong.

1 The debtor’s Chapter 11 reorganization plan was confirmed in late 2011, but the 

bankruptcy case was not closed until June 2014.

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First, 28 U.S.C. § 1334(b) explicitly grants “the district courts . . . original 

but not exclusive jurisdiction of all civil proceedings arising under Title 11, or 

arising in or related to cases under title 11.” 28 U.S.C. § 1334(b) (emphasis 

added). Under this framework, district courts have Article III jurisdiction over 

bankruptcy cases and proceedings. The bankruptcy courts are within the 

district courts’ purview, and cases are assigned to the bankruptcy courts by 

way of referral from a district court. See 28 U.S.C. § 157(a). Normally, cases 

are automatically so assigned pursuant to local court rules. Id. At most, the 

district court arguably could have referred this case to the bankruptcy court 

pursuant to Local Rules of the Southern District of Texas. S.D. Tex. General 

Order 2012-6. Any such failure to refer, however, is not raised before us and 

in any event is not jurisdictional.

Infopia mistakenly relies on In re Canion, 196 F.3d 579 (5th Cir. 1999) 

and In re Tidewater Group, Inc., 63 B.R. 670 (Bankr. N.D. Ga. 1986), in 

contending that the district court lacks jurisdiction if a case will have a 

conceivable effect on a bankruptcy estate. In each case, the court found that 

because a dispute had some “conceivable effect” on, and was thus “related to” 

the bankruptcy, the bankruptcy court had jurisdiction. Neither case restricts, 

or even directly addresses, the jurisdiction of the district court, and neither 

dictates the outcome here. Infopia also mistakenly argues that In re Duval 

Cnty. Ranch Co., 167 B.R. 848, 849 (Bankr. S.D. Tex. 1994), supports its 

argument that under 28 U.S.C. § 1334(e) the district court is divested of 

jurisdiction over the question whether an asset is property of the debtor’s 

estate.2 In Duval County, however, the issue concerned jurisdiction as between 

2 Section 1334(e) states that “[t]he district court in which a case under Title 11 is 

commenced or pending shall have exclusive jurisdiction: (1) of all the property, wherever 

located, of the debtor as of the commencement of such case, and of property of the estate. . .” 

§ 1334(e)(1) (emphasis added).

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the bankruptcy court and a state court to adjudicate property of the estate. Id.

The bankruptcy court concluded that it retained exclusive jurisdiction and 

refused to remand the case to state court. Nothing in Duval County compels 

the conclusion that a federal district court lacks jurisdiction over these types 

of cases. 

Consequently, the district court had jurisdiction over this case.

IV. 

Wellness Wireless next argues that the district court abused its 

discretion when it concluded that under Federal Rule of Civil Procedure 19, 

Diabetes America was a necessary and indispensable party that could not be 

joined because it was in bankruptcy. 

Rule 19(a) governs joinder of necessary parties and states in part: 

(a) Persons required to be joined if feasible.

(1) Required Party. A person who is subject to service of 

process and whose joinder will not deprive the court of subjectmatter jurisdiction must be joined as a party if: . . . (B) that person 

claims an interest relating to the subject of the action and is so 

situated that disposing of the action in the person’s absence may: 

. . . (ii) leave an existing party subject to a substantial risk of 

incurring double, multiple, or otherwise inconsistent obligations 

because of the interest. 

Fed. R. Civ. P. 19(a)(1)(B)(ii).

The district court’s ruling implied its concern that failure to join 

Diabetes America could subject Infopia to the risk of multiple or 

inconsistent liabilities. The undisputed facts, however, establish that 

Diabetes America has no further claim based upon the promissory note. 

After receiving the $300,000 settlement payment in 2010 from Infopia, 

Diabetes America neither listed such a claim on its bankruptcy schedules

nor retained any claim to recovery on the promissory note in its 

reorganization plan. Further, when asked explicitly by the district court 

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in late 2013 whether the debtor’s estate retained any right to collect 

under the promissory note, the representative of the bankruptcy plan’s 

agent stated to the district court that he did not believe the debtor had 

any rights under the promissory note. Diabetes America has no interest 

in the promissory note, and Infopia cannot be subject to additional

liability to Diabetes America or the purchaser of its assets.

Moreover, to the extent Infopia urges joinder of Diabetes America 

to prevent Infopia’s inconsistent, additional liability to Wellness 

Wireless, its position is misplaced. If the court below concludes that the

promissory note was not validly assigned to Wellness Wireless, or if the 

court upholds Infopia’s other defenses, Infopia will prevail. If the court, 

however, concludes that the assignment was valid, and that Infopia was 

on prior notice of the assignment, then Infopia may have knowingly paid 

the wrong party to begin with. Holloway-Houston, Inc. v. Gulf Coast 

Bank & Trust Co., 224 S.W.3d 353, 361 (Tex. App.—Houston [1st Dist.] 

2006). Infopia’s dual liability would be self-inflicted. Joinder of Diabetes 

America is irrelevant to the ultimate outcome, although that company’s 

representative must be considered a likely witness.

V.

That this dispute has persisted for nearly five years in three court 

cases seems to make little sense. Perhaps the district court can bring 

the present case to a speedy conclusion. For the foregoing reasons, we 

must, unfortunately, REVERSE and REMAND for further proceedings.

REVERSED and REMANDED. 

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